Containing Use and Expenditures in Publicly Insured Long-Term Care Programs

Miller, Robert H., Health Care Financing Review

British Columbia and Manitoba have the most developed and comprehensive publicly financed long-term care (LTC) programs in North America. For U.S. policymakers, these programs are large-scale natural experiments with public LTC insurance. During the 1980s, both provinces successfully contained the growth of public expenditures on nursing homes, and one province successfully contained the growth of public expenditures on home support services, adjusting for population growth. Because provincial cost-control methods are similar to those that some States already use, it is likely that managers could contain the growth of public expenditures once a publicly insured U. S. LTC program was implemented. The level of public expenditure would depend partly on the level of compensation for LTC sector personnel, which is relatively low in the United States.

INTRODUCTION

Of the $47.9 billion spent on U.S. nursing home care in 1989, nursing home residents and their families paid 44 percent, Medicaid paid 43 percent, and private insurance paid only 1 percent (Lazenby and Letsch, 1990). Reflecting discontent with current LTC financing arrangements, various reform proposals aim to reduce financial burdens on both individuals and government welfare programs. Some proposals emphasize combining privately purchased LTC insurance with a Medicaid benefit covering either the front or back end of a privately insured nursing home stay, while others stress financing of community-based services or reforms of the present system without Federal involvement (McCall, Knickman, and Bauer, 1991).

One LTC financing proposal would create a universal, comprehensive public LTC insurance program, with strong similarities to programs in some Canadian provinces (Harrington et al., 1991). Although an increasing number of studies have examined the hospital and physician sectors of the Canadian health care system (Barer, Welch, and Antioch, 1991; Evans, Barer, and Hertzman, 1991; Evans et al, 1989; Fuchs and Hahn, 1990; Krasny and Ferrier, 1991; Lomas et al., 1989; Neuschler, 1990; Neuschler, 1991; Newhouse, Anderson, and Roos, 1988; Waldo and Sonnefeld, 1991) in order to draw lessons for the reform of the U.S. system, only one study has examined Canadian LTC from that perspective (Kane and Kane, 1985a; 1985b). After looking at the LTC systems in British Columbia, Manitona by and Ontario, the latter study concluded that the comprehensive, universal, single-point of entry, publicly insured LTC programs in British Columbia and Manitoba were viable policy alternatives for the United States.

Although the work by Kane and Kane served an important function in introducing Canadian LTC programs to a wide American audience, it presented data only up to March 1983 for some series, and older data than that for others. Moreover because of important data limitations, it lacked key information needed to evaluate the performance of the British Columbia and Manitoba LTC systems. Specifically, the Kanes' article and book (1985a; 1985b) did not provide: (1) any home support service expenditure data, except for a single figure for 1982-83 in Manitoba, which did not separate LTC and post-acute care community services; (2) any aggregate home-support use data for Manitoba, except from a 1978 sample survey; or (3) any LTC facility expenditure information for British Columbia. In addition, inconsistent definitions of use and expenditure categories of LTC services, resulting in three different LTC facility use rates for British Columbia, made important direct comparisons impossible between the provinces, let alone between the provinces and the United States.

A central concern in the extended debate over financing U. …

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